Correlation Between Beijing Enlight and Soochow Suzhou

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Can any of the company-specific risk be diversified away by investing in both Beijing Enlight and Soochow Suzhou at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Beijing Enlight and Soochow Suzhou into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beijing Enlight Media and Soochow Suzhou Industrial, you can compare the effects of market volatilities on Beijing Enlight and Soochow Suzhou and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Beijing Enlight with a short position of Soochow Suzhou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Enlight and Soochow Suzhou.

Diversification Opportunities for Beijing Enlight and Soochow Suzhou

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between Beijing and Soochow is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Enlight Media and Soochow Suzhou Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soochow Suzhou Industrial and Beijing Enlight is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Beijing Enlight Media are associated (or correlated) with Soochow Suzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soochow Suzhou Industrial has no effect on the direction of Beijing Enlight i.e., Beijing Enlight and Soochow Suzhou go up and down completely randomly.

Pair Corralation between Beijing Enlight and Soochow Suzhou

Assuming the 90 days trading horizon Beijing Enlight Media is expected to under-perform the Soochow Suzhou. In addition to that, Beijing Enlight is 2.89 times more volatile than Soochow Suzhou Industrial. It trades about -0.01 of its total potential returns per unit of risk. Soochow Suzhou Industrial is currently generating about 0.46 per unit of volatility. If you would invest  336.00  in Soochow Suzhou Industrial on October 28, 2024 and sell it today you would earn a total of  25.00  from holding Soochow Suzhou Industrial or generate 7.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Beijing Enlight Media  vs.  Soochow Suzhou Industrial

 Performance 
       Timeline  
Beijing Enlight Media 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Enlight Media are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Enlight may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Soochow Suzhou Industrial 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Soochow Suzhou Industrial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Soochow Suzhou may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Beijing Enlight and Soochow Suzhou Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Beijing Enlight and Soochow Suzhou

The main advantage of trading using opposite Beijing Enlight and Soochow Suzhou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Enlight position performs unexpectedly, Soochow Suzhou can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Soochow Suzhou will offset losses from the drop in Soochow Suzhou's long position.
The idea behind Beijing Enlight Media and Soochow Suzhou Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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